Lesson 9

Store Planning, Design and Layout

Objective: After studying this lesson you will be able to understand: Store planning, Location planning, types of location, Store design retail mix, and the concept of space management in retail stores.

Structure:

9.1. Store planning

9.1.1. Location planning – types of locations

9.1.2. Site selection

9.2. Store design retailing mix

9.3. The space mix

9.4. Effective retail space management

9.4.1. Store layout: the circulation plan (the “silent guide”)

9.4.2. Floor space management

9.5. Summary

9.6. Key Terms

9.7. Questions

9.8. References

9.1. STORE PLANNING:

An important feature of Store Planning is Location Planning followed by Site Selection. It is the method of selecting the right location and an appropriate site for the store with the catchment’s definition for each store. The rollout plan defines the types of location selected on the basis of the retail format.

9.1.2. LOCATION PLANNING – TYPES OF LOCATIONS:

(A) High – Street Location characterized by

i). Very busy with high customer traffic.

ii). Has an array of retail stores in small sizes.

iii). Has stores that are generally found in clusters based on product     categories.

iv). High real – estate rentals.

Examples: linking road in Bandra. Mumbai, Brigade Road in Bangalore.

(B) Destination / Free standing location characterized by

i).Does not have high footfall rate (customer traffic needs to be pulled    in through the store’s marketing efforts or product/service/process differentiations).

ii).May not be a commercial retail area at all.

iii).Low real – estate rentals.

iv). May have large parking area.

Examples: Phoenix Mills Compound and Shoppers’ Stop in Mumbai.

(C) Shopping Centre /Mall Location characterized by

i). Has existing mall traffic.

ii). Has a clean environment.

iii).Has a designated parking area.

iv). Medium to high rental cost.

Examples: DLE Mall in Delhi, Spencer Plaza in Chennai, Crossroads in Mumbai.

Location Mapping: while planning the location strategy for the organization location mapping is crucial. It is also important to map the locations, so that extent of each store’s reach to the customers is well defined.

Location Parameters: It is necessary to define the store location identification variables in a format and see if the desired attributes are available.

9.1.3. SITE SELECTION:

Site selection in retailing refers to the type of building the retailer requires and its affordability. Retailers should decide whether they should own the property, lease the premises on rent or have a joint venture with the landlord. Site selection depends on the nature of the building, facade requirements, size requirements and costs. The size selection format is furnished below as a specimen.

Fig: Detailed site Selection variables

9.2. STORE DESIGN RETAILING MIX:

The requirement of customers visiting a local shop differs from those who visit a specialty goods retail outlet or a department store. Each retailer strategically plan a mix of elements to match the behaviors of the customer. A mix of the following six elements meets the physical and emotional needs of the customer:

(1) Employee Type and density:  The retailer employs sales force match the selling and image needs of his shop. A specialty shop like one of selling readymade garments will have a higher density of staff at about one per 100 sft. And the salesperson would be one who caters to the needs of the customer – speak the local language and look more homely (as the customers are mostly women).  In contrast, in a large department store the density of staff would be one per 450 sft.  They will be well educated and suitably dressed (in most cases in western clothes as these form a major part of the store offering).

(2) Merchandise Type and Density: The type of merchandise determines its density in the store.  A supermarket is very dense and averages about 7,000 per prices per 100 sft whereas a large department store would have about 700 pieces per 100 sft.  A designer – wear exclusive store, a boutique or a furniture retailer would have low density so as to make the merchandise appear exclusive.  The density of merchandise also determines the margins planned on the merchandise.  The lower the density the higher the margins.

(3) Fixture Type and Density: The fixtures have to complement the value of the merchandise.  A jeweler uses a lot of expensive woodwork and stones like marble and granite to add value to his merchandise, while a sportswear goods store uses more of metal and plastic.  The density of fixtures is measured as the number of fixtures per 100 sft. of store space.  This should complement the density of the merchandise as it has a big impact on the convenience of shopping.

(4) Sound Type and Density: Sound can be pleasant or unpleasant and can have a direct impact on the store atmosphere.  adds to the intensity of the experience.  An unpleasant sound like motor traffic or the roar of a plane, on the other hand, can have a negative effect.  The category of the merchandise determines the type and density of sound.  Soft instrumental music is usually used in jewellery and cosmetics, while the casuals and youth fashion wear segments are complemented by contemporary sound tracks from new bands.  Department stores play music based on the category of merchandise.

(5) Odour Type and Density: Like sound, odour too has a positive or negative effect on the store atmosphere.  Positive odours like that of fresh coffee beans or flowers add to the shopping experience in the men’s wear and cosmetics departments in a store.  Negative odours like those of a musty carpet, cigarette smoke, etc. can drive the right way.  The strength of the odour is also important and even the right odour if it is too strong can have a negative effect.

(6) Visual Type and Factors: These are a result of the overall store presentation – the interior design, display and visual merchandising.  Elements like lighting and colour can be controlled to make customers buy more.  Warm yellow shades of lights complement gold jewellery as they add richness.  Natural shades (day light colours) are good for garments as they bring out the colour of the merchandise.  Warm colours like bright red or yellow are said to increase the pulse rate in human beings and trigger impulse purchases.  Softer colour like pastels keep the pulse rate comfortable and are used in merchandise backdrops that need a longer time for inspection and selection (like watches and jewellery).

9.3. THE SPACE MIX:

For the retailer space is money.  The store has to be planned in such a way that it optimizes the selling area and minimizes the non-selling parts.  The selling area is used to present the merchandise and the non-selling part is accounted for by circulation space, aisles, staircases, lifts, facilities, the back area, etc.  The  area mix in a typical department stores is: selling area about 65%, circulation area 15% and back area 20%.

In a ready-made garment retail store, planning the size of the selling space starts with a wardrobe audit where a sample size of the customer segment is intercepted and their wardrobe mix of garments and accessories mapped.  This then determines the number of styles and the range width of the category.  Then a business plan is made based on this integration with space.

The selling space is then configured in terms of size and location of goods based on the mix of staple, convenience and impulse merchandise.

Staple goods   constitute about 55% of the store offering and are kept at the central and deeper ends of the store.  This enhances visibility, since the customer has to pass through the entire store to reach them.  The shirts and trousers section in department stores form the staple merchandise.  Similarly, grains and sugar are the staples in a supermarket.

Convenience goods  constitute about 30% of the store and are bought in multiple units.  These need to be in convenient locations in the store to ensure conversions.  Undergarments and white basic cotton T-shirts in a department store are convenience merchandise.

Impulse purchase merchandise – which usually constitutes about 20% of the store and has the highest rate of sale and is given maximum exposure in order to tempt the customer to buy them.  Candies in a supermarket and socks and hair accessories in a fashion store are impulse purchase items and are kept near the cash counters and entrances.  The customer picks them up after shopping for convenience and staple merchandise.  The locations of various goods are chosen carefully to ensure that the customer is exposed to the entire store, thus increasing the possibility of a purchase.

In the words of  Ajay Mehra, CEO of Times Retail (Planet M) says: “space management does not end with just optimization, but has a much larger opportunity for merchandise promotion and display which not only can bring profit  for a retail organization but entertain and delight customers too.”

9.4. EFFECTIVE RETAIL SPACE MANAGEMENT:

The sight of a good retail store with attractive windows and an enticing entrance attract the customer into entering.  The customer enters the store and often keeps walking inside following the walkway wherever it leads, or sometimes takes a while to look for directions within the store.  Sometimes the customer’s attention is drawn to certain displays and merchandise presentations before he moves on.  To reach his destination inside the store, the customer tends to follow directions to reach there, especially in a big box format.  Seldom does he realize that subconsciously he is directed to ‘walk’ the entire store and thus exposing him to all that the store has to offer.  This is achieved through a well thought-out and laid-out retail floor design.

A well-planned and properly designed retail floor achieves a great deal for the store:

(a)  It enables a smooth and efficient customer flow into the store and within it.

(b)  It helps the customer reach and access the merchandise he is looking for, without fail.

(c)  It helps create a feeling of comfort in the minds of customers, enabling them to waltz their way through without facing any bottlenecks on the way.

(d)  The aesthetics of a well-planned floor are a visual feast for the customer and trigger the ‘come-back’ feeling in him, as he feels a sense of belonging in the store.

(e)  A well laid-out floor, in essence, helps the store to sell more effectively and retain customers.

Effective retail floor space management is critical to the successful operation of a retail store, as more and more sales from the same space would lead to increased margins for the store.  According to R. Sriram, CEO of Crossword: “Space planning is integral to the success of any retail store since the biggest investment in retail is in space.”

9.4.1. STORE LAYOUT: THE CIRCULATION PLAN (THE “SILENT GUIDE”)

Once inside the store, the customer needs to be guided silently to where he/she wants to go and also expose him/her to the entire store offering.  This can be achieved by planning the circulation and the location of the merchandise.

While designing store layout, circulation planning is done to lead the customer from area to area with the help of aisles that weave through the merchandise area.  Focal points highlighted with accent lighting and displays strategically placed along the aisles pull the customer from section to section in a ‘Pinball Effect’.  A series of these ensure that the customer is silently guided through the entire store.

The width of the aisles is planned according to the density and traffic pattern.  The main aisle or ‘highway’ in a department store in six feet wide , which is the width of a double doorway, and facilitates easy passage in both directions.  The side aisles or ‘side roads’ that branch out are three or four feet wide.  In supermarkets, the aisles are three feet wide and form a denser grid around the fixtures.

The aisles form a circulation pattern that can be of different types depending on the store configuration.  The area occupied by the aisles is normally 12-15% of the store carpet area.  Some of the layout circulation types used is Free Flow, Grid, Race Track, Herringbone and Spine.

-          Free Flow Circulation is used in stores where the merchandise and fixtures are grouped in clusters as in boutiques.

-          Grid Circulation is used typically in a supermarket where the aisles and fixtures are at right angles to each other.

-          Race Track Circulation issued in larger and wider stores where the customer is made to circle around the floor and get back to the beginning, usually the lift or the staircase lobby, to move to the next level of the store.

-          Herringbone Circulation is used for a narrow store of maximum 40 ft width where the highway is a single two-way one, bisecting the store along its length with ‘side roads’ leading to the walls from it.

-          The spine form is a Herringbone layout without the ‘side roads’. Says Sriram of Crossword: “Since the browsing experience in books is a critical part of the book-buying process, circulation planning plays a critical role, enabling the right experience.”

9.4.2. FLOOR SPACE MANGEMENT

One of the common problems in retail floor space management in India is lack of attention paid to space productivity.  Usually space productivity does not figure in the Key Result Areas of either the Store Operations or Buying and Merchandising departments.  But ideally both should pay attention to this area.  Store Operations, since it is responsible for recorders and replenishments, and Buying and Merchandising because it is accountable for the Gross Profit Return (GPR) on the space occupied by the merchandise. Following are the variables to judge the performance of space management in the retail stores.

Variables to Judge Space Performance

1. The sales output and the ensuing margins.

2. The inventory holding that lads to sales and the ensuing margins.

In the words of G.S.M. Ghaznavi, former Vice-President ( Retail) at Bata India Ltd:’ One must analyze statistics of the value of merchandise and margins broken down to the space occupied by micro-groups of merchandise in the store. This will help retailers develop a blueprint for profitable deployment of space especially in chain store operations. In addition, not only should merchandise categories be placed in the right locations that will maximize profitability but such placement should help attain uniformity for comfortable shopping by customers.”

Rules for successful space Management:

1. Remember the golden rule of the retail floor space planning and management game – the convenience of the customer comes first.
2. Provide the greatest opportunity for the customer to walk around the store and watch though all the merchandise displayed.
3. Optimize the trading space to achieve maximum sales, while not neglecting the non-trading area for customer convenience/concessions in order to ensure that they spend a longer time in the store and increase revenues.
4. Make the right floor space management decisions after every space audit , making the necessary course-corrections on time as space costs a good deal of money.
5. Appeal to all five senses of the customer by creating an aesthetic and functionally effective ambiance.

9.5. Summary:

An important feature of Store Planning is Location Planning followed by Site Selection. It is the method of selecting the right location and an appropriate site for the store.   Location planning generally depends on the types of locations and their characteristics.  The important types of locations are High-street location, Destination / Free standing location, Shopping Centre /Mall Location. Site selection in retailing refers to the type of building the retailer requires and its affordability. Site selection depends on the nature of the building, facade requirements, size requirements and costs. The size selection format is furnished below as a specimen.

A mix of the following six elements popularly called as retail site selection mix  meet the physical and emotional needs of the customer they are, Employee Type and density,  Merchandise Type and Density, Fixture Type and Density, Sound Type and Density, Odour Type and Density, Visual Type and Factors,

For the retailer space is money.  The store has to be planned in such a way that it optimizes the selling area and minimizes the non-selling parts.  The selling area is used to present the merchandise and the non-selling part is accounted for by circulation space, aisles, staircases, lifts, facilities, the back area, etc.  The selling space is then configured in terms of size and location of goods based on the mix of staple, convenience and impulse merchandise.

The sight of a good retail store with attractive windows and an enticing entrance attract the customer into entering. A well-planned and properly designed retail floor achieves a great deal for the store.   While designing store layout, circulation planning is done to lead the customer from area to area with the help of aisles that weave through the merchandise area.  Finally, it is very much important to judge the space performance.  To Judge Space Performance are the sales output and the ensuing margins and the inventory holding those lads to sales and the ensuing margins.

9.6. Key Terms:

Site Selection: it refers to the type of building the retailer requires and its affordability.

Space Management:  Planning, designing and creating retail floors to achieve great deal with customers.

9.7. Questions:

1. Explain the salient steps to be taken in planning and designing a stores layout

2. Explain the concept of “Space Mix”.

3. Describe the key parameters that you suggest while judging the performance of space management.

4. Suggest some guidelines for successful space management.

9.8. References:

Michael Levy, Barton A Weitz; Retail management; Fifth Edition; Tata Mc Graw-Hill Publishing Company Limited.

Barry Berman, Joel R. Evans;  Retail management; Eighth Edition; Pearson Education Asia.

www.wikipedia.org